Bitcoin Now Above $1,800 – When Will the Rally End?

FinTech, Innovation, Investing, News | May 11, 2017 By:

The bitcoin price surge continued today, as a single coin was selling for as much as $1,839 on some exchanges as of mid-day, following a brief pause Wednesday at the $1,700 mark.

Today’s mark represents yet another all-time pricing high for the godfather of cryptocurrency, and continues a May surge that has seen seen prices shoot-up more than $500 since the beginning of the month. Overall, bitcoin is riding a remarkable rise in 2017 after a brief slump in March.

The rising tide has lifted other cryptocurrencies. Ethereum’s ether has gone over the $90 mark, also an all-time high. Litecoin is now around $30, while Dash is also now over the $90 mark. Monero is around $29, while Zcash is around $100 on various exchanges. Overall market capitalization for cryptocurrency has topped $30 billion worldwide.

The rally floor for bitcoin’s all-time high was achieved on March 10, when it topped the $1,300 mark for the first time. A disappointing ruling by the US Securities and Exchange Commission on the Winklevoss twins’ bid to establish an exchange-traded fund briefly drove down the price to the mid-$900 range. Since then, it has increased an estimated 40 percent.

Increased worldwide trading, Japan’s legalization of bitcoin as a monetary unit, and improved outlooks from Russia and India toward easing regulations in those countries have been cited as reasons for the rally. In the US, the SEC said it will review its decision to deny the Winklevoss exchange-traded fund, also sparking some optimism.

NEW INVESTORS ARE DRIVING RALLY

Miklas Denkler, Founder and CEO of CORION, a decentralized financial services platform, says the new user base created by the Japanese recognition of bitcoin is driving the price surge. “Talented traders buy bitcoin and alt-coins to hold long-term now,” Denkler said, adding, “What could derail this is negative news from EU regulation, a successful hacker attack to Poloniex, or another big exchange.”

Ibrahim Mohammed, the founder of OneGram, an Sharia-compliant service which backs cryptocurrency with gold, also cited Japan for the increase. “A lot of the rcent purchase have been through the Yen,” Mohammed said. “I believe the other factor is not directly linked to BTC< but more to do with Litecoin developing faster transaction processing technology, which many believe could be adopted by BTC.”

Mohammed cautioned that any moves by China toward commodities, and “BTC could take a major hit in price.”

Dave Carlson, founder of Giga Watt, which delivers turnkey mining systems, claims the price run is part of the “residual effects of a reduction in supply (mining reward halving), combined with a rapidly increasing global demand for Bitcoin. Price is following the same pattern as the first halving when we moved from $100 toward $1000.”  Carlson’s cautioned that “there are many factors that could bring about enough uncertainty to dramatically affect price.  For example, conflict about block size scaling could result in a split of the network, which would be bad for value.”

Michael Terpin, the head of Transform Group, chairman of BitAngels, and producer of the CoinAgenda cryptocurrency investing conferences, said new pricing highs are increasing the temptation for new mainstream investors to jump on the train. “When markets get ahead of themselves, as some chartists believe this one has, it can be brought back to lower levels by something as simple as a large holder cashing out enough to drop the price a few hundred dollars.  The fact that this happened a week ago and the price easily recovered and went higher means the bar is higher now for what is considered to be derailing news.”

Konstantin Lomashuk, founder and CEO of the Satoshi.Fund, said the surge is likely attributed to a”network effect,” which amplifies the value of something as more people use it. “Also, the higher the price, the more media coverage, and as a result the more new buyers of bitcoin.”

Lomashuk cited the potential hard fork as a potential derailer of the price increases. “The split of the bitcoin chain into two could affect the price adversely.”